The High Court in Uganda recently dismissed an application that sought to upend the central bank directive that bars cryptocurrency transactions. 

⚖️Legal Alert
The High Court of Uganda has held that "Cryptocurrency transactions by consumers or investors are not protected by government regulations or oversight." Stating further that "The current regulatory framework was not designed with cryptocurrencies in mind"

— Centre For Technology Disputes Resolution – Uganda (@CTDR_Uganda) April 24, 2023

In his ruling, the court’s Justice Musa Ssekaana insisted that the Bank of Uganda (BOU)’s April 2022 directive does not infringe on individual property rights. Instead, the directive is an attempt by the central bank not to legalize the undefined system as a payment instrument in Uganda.

As previously reported in May 2022, the BOU warned parties disregarding its directive that it will not hesitate to invoke its powers under Section 13(l) (b) & (f) of the National Payments System Act, 2020 for any licensees that will be found in breach of the above directive.

Immediately after the directive was issued, Silver Kayondo, a Partner at Ortus Advocates and a Ugandan crypto trader, sought redress via the High Court. In addition to having the court declare cryptocurrencies legitimate digital assets. 

Silver also wanted the court to set aside the central bank’s directive.

However, in ruling against Kayondo’s application, Justice Ssekaana said the BOU acted appropriately when it issued the directive.

Justice Ssekaana remarked, “The applicant cannot make a claim for legitimate expectation merely because the public statement did not outlaw the same. The statement did not promise to the applicant or other stakeholders that cryptocurrencies would be allowed in Uganda or would never be regulated. Legitimate expectation relates to a promise in relation to an existing situation which will continue, or to a future benefit, advantage or course of action which the authority will follow.”

The judge also noted that the BOU directive clearly states Uganda’s position with respect to cryptocurrencies and that the context cannot be distorted to infer any benefit or promise of legality. He also ordered each party to bear the costs of bringing the matter before the courts.